Negotiating is a two sided game and both want to be the winner. However, when it comes to business deals it is a little more volatile than some negotiations. If I were negotiating a price on a house or something that I want to buy, I could care less about the other person’s emotions. I want to get the best price I can for the product, without being totally unfair to them. Along with that, I presume they want to get as much money from me as possible. In an angel investment, the relationship actually does matter though because you do not simply walk away from the investment when you have negotiated a deal.
In this chapter there were two types of negotiations. Either you 1. Negotiate or 2. you do not negotiate. I thought that was pretty funny but incredibly true. Some angels would only fall in either category but it seems like it would differ depending on the entrepreneur, but as I read through the lists on page 232 and saw in the entire chapter, the relationships and its trajectory are key.
Angles do not want an arrogant and greedy entrepreneur who is trying to keep everything for themselves. Unwilling to give over any major share in the company. The entrepreneur wants someone who will not want to take total control of the company and wants to know how much on a leash they are essentially. With both of these they are battling for a good relationship in the negotiation process.
I believe that negotiations are necessary but not in an aggressive way. In an article on building relationships on Inc.com one of the steps was to err on the side of humility. Coming in assuming the best of the other person and willing to lay yourself down before them. This is the sort of principle that seems like it would fit in with the negotiation process we are seeing being between angel investors and entrepreneurs.
The relationship is what will make a deal work so studying numbers and getting the most out of the deal is not the greatest way to build a long term successful business. Same way it is not the best way to start a longer term successful marriage or friendship. It is important to use negotiations as a form of learning about the other person and getting to know them so that you two can grow together and build a great company.
- Lin, Ken. “7 Steps to Building Better Business Relationships.” Inc.com, Inc., 7 Apr. 2015, http://www.inc.com/ken-lin/7-steps-to-building-better-business-relationships.html.
- Amis, David, and Howard H. Stevenson. Winning Angels: the Seven Fundamentals of Early-Stage Investing. Financial Times Prentice Hall, 2001.